The developed money market as in the countries of England and U.S.A. has the fol­lowing characteristics:

(i) Existence of Central Bank,

(ii) Highly organized commercial Banking System

(iii) Existence of sub-markets


(iv) Healthy competition in sub-markets

(v) Integrated structure of money market

(vi) Availability of proper credit instruments.

(vii) Adequacy and Elasticity of funds


(viii) International attraction

(ix) Uniformity of interest rates

(x) Stability of prices and

(xi) Highly developed Industrial system


(i) Existence of Central Bank:

In the developed money market, the role of Central Bank is notable. It controls the entire money market operations by making the availability of funds depending upon the economic cycles. It can be done through its open market operations.

(ii) Highly organised Banking System:

As they are the main dealers in short-term funds, the commercial banks are considered as nervous system of the money market. Therefore, a well developed money market will have a highly organised and developed commercial banking system.


(iii) Existence of sub-markets:

In developed money market the various sub-markets existed and functioning smoothly. That is, the money market will have a developed sub- markets such as bill market, call money market, acceptance market, discount market, etc. It can be said that the larger the number of sub-markets, the broader and more developed will be the structure of the money market.

(iv) Prevalence of healthy competition:

In each sub-market there should be a reasonable and healthy competition. That is, in a developed money market, there are a large number of borrowers, lenders and dealers. Then only each market will be active enough to achieve the purpose of its existence.


(v) Integration of sub-markets:

In the developed money market there will be a perfect integration among various sub-markets of the money market. Their functioning are inter­dependent. The funds flow from one sub-market to another and the activities of one sub- market should create effects in the other markets also.

(vi) Availability of proper credit instruments:

The developed money market should have the necessary credit instruments such as treasury bills, promissory notes, bills of exchange, etc. They should be freely available.


(vii) Flexibility and adequacy of funds:

In a developed money market, there must be ample resources. The flow of funds into the money market should also be flexible enough, i.e., the flow of funds can be increased or decreased depending upon the demand for funds.

(viii) International attraction:

The developed money markets attract funds from foreign countries also. The dealers, borrowers and lenders of foreign countries are eagerly coming forward to participate in the activities of developed money market.

(ix) Uniformity of interest rates:

Prevalence of uniformity in interest rates in different parts of the country is the characteristic feature of a developed money market.

(x) Stability of prices:

Stability of prices all over the country will be an outcome of the effective functioning of a developed money market.

(xi) Highly developed industrial system:

The money market will function smoothly and can achieve the basic purpose of its existence only when there is a highly developed indus­trial system. Developed money market demands for such a system.